CCI Gold Analysis and CCI Trading Signals
Developed & Created by Donald Lambert
Commodity Channel Index measures the variation of a commodity xauusd gold price from its statistical mean(statistical average).
This technical indicator acts as an oscillator, fluctuating between high and low levels.
When the CCI registers a high value, it signifies that the xauusd price is significantly above its average level.
When the CCI is low, it indicates that the xauusd price is significantly below the average.
XAU/USD Analysis and How to Generate Trading Signals
Over-bought/ Over-sold Levels
The CCI typically oscillates between ±100.
Readings exceeding +100 indicate overbought conditions, suggesting an imminent market correction.
Readings from the indicator falling below the -100 mark suggest the market is over-sold and likely due for a correction.
Buy Signal
If the CCI is in an oversold condition, indicated by levels below -100, a market correction is likely to occur.
The oversold levels will remain intact until CCI begins to move above -100.
When xauusd gold price begins moving above -100 then that is viewed as a buy.
The Commodity Channel buy signal should be combined with a trend line break signal to confirm the buy.
Buy Trade
Sell Gold Signal
When the CCI registers in the overbought territory, specifically above +100, a market reversal is anticipated.
The overbought condition will persist until the Commodities Channel Index indicator starts descending beneath the +100 threshold.
When xauusd gold price begins moving below +100 then that's a interpreted as sell.
A sell signal generated by the Commodity Channel Index should ideally be confirmed by the concurrent breakout of a trend line to validate the selling indication.
Sell Trade
Divergence Trade
Bullish XAUUSD Trade Divergence Setup
A bullish divergence happens when price makes new lows, but the Commodities Channel Index doesn't drop below its previous low.
Divergence setups indicate potential upward corrections and serve as bullish signals for market analysis.
Bearish XAUUSD Trade Divergence Trading Setup
Bearish Divergence forms when the price is forming/making new highs while the CCI technical indicator is failing to surpass its previous high.
This is a bearish signal because the divergence trading setup will be followed by a downward market correction.
Technical Analysis in XAUUSD Trading
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